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Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

Kickbacks. The payment made to someone to facilitate an illicit transaction. A fraudster favorite. It’s the thing that makes people make bad choices. And it’s the thing that eventually needs to be explained. Like, “can you explain how these millions got into your account?” It was a problem for Medoc Health Services.
Medoc Health Services only had the intent to fraud. In 2015, Medoc created more than twenty physician owned subsidiaries. Medoc paid those doctors based on the number of patient referrals they sent to Medoc, fraudulent or not. Medoc rewarded the doctors who wrote the most prescriptions with higher payments while those with a lower volume were either cut off or given lower payments. That’s an incentive.

Medoc then sent the prescriptions to pharmacies of its choosing to be filled. Who were the pharmacies that got chosen? The ones willing to pay the kickbacks! Medoc steered prescriptions of compound pain creams and other medications to three North Texas pharmacies in exchange for kickbacks. The compounding pharmacies paid kickbacks to Medoc from earnings they received from Medicare, Tricare (the military’s health plan) and Department of Labor insurance programs. Medoc’s owners fraudulently received from government healthcare programs about $2 million from this scheme.

But how to explain the money? Michael Schneider at your service. Medoc disguised the kickbacks as a salary paid to Schneider, a Medoc partner. Schneider then split the money with the other defendants using shell companies. Two of the pharmacies, Total RX Care and Midcities Pharmacy, signed “sham employment agreements” with Michael Schneider in order to use his supposed salary to hide the kickbacks. A third pharmacy, Doctors Specialty Pharmacy, also paid kickbacks to Medoc.

Excellent job at the Department of Health and Human Services.

Today’s Fraud of The Day is based on article “Top execs plead guilty to kickback scheme in Dallas medical fraud case” published by The Dallas Morning News on November 24, 2023

Five years after federal agents left a northwest Dallas office building in May 2018 with boxes holding the documents of a healthcare company, five of seven defendants have pleaded guilty in a medical kickback scheme.

In addition to the guilty pleas, which included two top executives at Medoc Health Services, the government won judgments for millions of dollars in a related civil fraud lawsuit, court records show. The two remaining defendants are scheduled to go on trial next month.

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